Sainsbury/Asda and Tesco – a duopoly in the making?

They’ve agreed the numbers; now comes the charm offensive. JSainsbury (SBRY) and Asda have confirmed plans to merge in a deal that would hand Asda’s current owner, Walmart, around £2.98bn in cash and a 42 per cent stake in the combined business (although with maximum voting rights of 29.9 per cent). Walmart's holding will also be subject to a lock-up for the first two years following completion. The deal values Asda at around £7.3bn on a cash-free, debt-free and pension-free basis, with a resultant implied enterprise/cash profit multiple (EV/Ebitda) of 5.8.